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Tax Software 2005 2006

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Tax Software 2005 2006

Tax software 2005 2006 Index A Abusive tax shelters (see Tax shelters) Accounting fees, Attorney or accounting fees. Tax software 2005 2006 Accrual method, Accrual method taxpayers. Tax software 2005 2006 , Accrual method. Tax software 2005 2006 , Holders must use accrual method. Tax software 2005 2006 , When To Deduct Investment Interest Accuracy-related penalty, Accuracy-related penalty. Tax software 2005 2006 Acquisition discount, Government obligations. Tax software 2005 2006 , Acquisition discount on short-term obligations. Tax software 2005 2006 Adjusted basis, Basis adjustment. Tax software 2005 2006 , Fair market value equal to or more than donor's adjusted basis. Tax software 2005 2006 , Adjusted Basis, Short sales. Tax software 2005 2006 Alaska Permanent Fund dividends, Alaska Permanent Fund dividends. Tax software 2005 2006 , Child's Alaska Permanent Fund dividends. Tax software 2005 2006 Amortization of bond premium, Bond Premium Amortization, Bonds acquired after October 22, 1986, but before 1988. Tax software 2005 2006 Annuities Borrowing on, Borrowing on insurance. Tax software 2005 2006 Interest on, Interest on annuity contract. Tax software 2005 2006 Life insurance proceeds used to buy, Annuity. Tax software 2005 2006 Sale of, Sale of Annuity Single-premium, Single-premium life insurance, endowment, and annuity contracts. Tax software 2005 2006 Trade for, Trade of investment property for an annuity. Tax software 2005 2006 , Insurance Policies and Annuities Applicable federal rate, Applicable federal rate. Tax software 2005 2006 Appreciated financial positions, Constructive Sales of Appreciated Financial Positions Arbitrage bonds, Arbitrage bonds. Tax software 2005 2006 Assistance (see Tax help) At-risk rules, At-risk rules. Tax software 2005 2006 , At-risk rules. Tax software 2005 2006 Attorneys' fees, Attorney or accounting fees. Tax software 2005 2006 Automatic investment service, Automatic investment service and dividend reinvestment plans. Tax software 2005 2006 , Automatic investment service. Tax software 2005 2006 , Automatic investment service. Tax software 2005 2006 Average basis, Average Basis Double-category method, Transition rule from double-category method. Tax software 2005 2006 Illustrated, Average basis method illustrated. Tax software 2005 2006 B Backup withholding, Backup withholding. Tax software 2005 2006 Bad debts, Nonbusiness bad debt. Tax software 2005 2006 , Nonbusiness Bad Debts Bankrupt financial institutions Deposit in, Deposit in Insolvent or Bankrupt Financial Institution Bargain purchases, Bargain purchases. Tax software 2005 2006 Basis, Basis of Investment Property, U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury Notes or Bonds Adjusted, Basis adjustment. Tax software 2005 2006 , Fair market value equal to or more than donor's adjusted basis. Tax software 2005 2006 , Adjusted Basis, Short sales. Tax software 2005 2006 Average, Average Basis Cost, Cost Basis, Cost Basis Inherited property, Property Received as Inheritance Investment property, Basis of Investment Property Like-kind exchanges, Basis of property received. Tax software 2005 2006 Other than cost, Basis Other Than Cost REITs, Shares in a mutual fund or REIT. Tax software 2005 2006 REMIC, residual interest, Basis in the residual interest. Tax software 2005 2006 Replacement stock, Basis of replacement stock. Tax software 2005 2006 Shares acquired by reinvestment, Reinvestment right. Tax software 2005 2006 Stocks and bonds, Basis adjustment. Tax software 2005 2006 , Basis. Tax software 2005 2006 , Basis. Tax software 2005 2006 , Stocks and Bonds Bearer obligations, Bearer CDs. Tax software 2005 2006 , Bearer Obligations Below-market loans, Below-Market Loans Bonds Accrued interest on, Accrued interest on bonds. Tax software 2005 2006 Amortization of premium, Bond Premium Amortization Arbitrage, Arbitrage bonds. Tax software 2005 2006 Basis, Basis. Tax software 2005 2006 , Stocks and Bonds Capital asset, Stocks, stock rights, and bonds. Tax software 2005 2006 Convertible, Convertible stocks and bonds. Tax software 2005 2006 Coupon, Coupon bonds. Tax software 2005 2006 Enterprise zone facility, Enterprise zone facility bonds. Tax software 2005 2006 Federally guaranteed, Federally guaranteed bonds. Tax software 2005 2006 Identification, Identifying stock or bonds sold. Tax software 2005 2006 Market discount, Market discount. Tax software 2005 2006 , Limit on interest deduction for market discount bonds. Tax software 2005 2006 , Market discount on bonds. Tax software 2005 2006 , Market discount bonds. Tax software 2005 2006 , Market discount bonds. Tax software 2005 2006 New York Liberty bonds, New York Liberty bonds. Tax software 2005 2006 Par value, Bonds purchased at par value. Tax software 2005 2006 Premiums on, Bond premium. Tax software 2005 2006 , Premiums on bonds. Tax software 2005 2006 Private activity, Private activity bonds. Tax software 2005 2006 Redemption or retirement of, Redemption or retirement of bonds. Tax software 2005 2006 Sold between interest dates, Bonds Sold Between Interest Dates State and local government, Tax-exempt state and local government bonds. Tax software 2005 2006 Stripped, Stripped bonds or coupons. Tax software 2005 2006 , Stripped Bonds and Coupons, Stripped tax-exempt obligation. Tax software 2005 2006 Tax credit bonds, Tax credit bonds. Tax software 2005 2006 Tax-exempt, Tax-exempt state and local government bonds. Tax software 2005 2006 Traded flat, Bonds traded flat. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 savings (see U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds) U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury (see U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury bills, notes, and bonds) Brokerage fees, Fees to buy or sell. Tax software 2005 2006 , Sale expenses. Tax software 2005 2006 C Calls and puts, Puts and Calls Table 4-3, Table 4-3. Tax software 2005 2006 Puts and Calls Capital assets, Capital Assets and Noncapital Assets Capital gain distributions, Capital Gain Distributions, Basis adjustment. Tax software 2005 2006 , Capital gain distributions. Tax software 2005 2006 , Child's capital gain distributions. Tax software 2005 2006 , Capital gain distributions received. Tax software 2005 2006 Capital gains and losses, Capital Gains and Losses, Loss on stock that paid qualified dividends. Tax software 2005 2006 Constructive ownership transactions, Gains From Certain Constructive Ownership Transactions Definition, Capital or Ordinary Gain or Loss Empowerment zone assets, Exclusion of Gain From DC Zone Assets Investment property, Investment property. Tax software 2005 2006 Long-term, Short-Term or Long-Term Capital Gain or Loss, Long-term gains and losses. Tax software 2005 2006 Long-term debt instruments, Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). Tax software 2005 2006 Losses, limit on, Limit on deduction. Tax software 2005 2006 Passive activities, Passive activity gains and losses. Tax software 2005 2006 Qualified covered call options, Capital loss on qualified covered call options. Tax software 2005 2006 Qualified small business stock, Gains on Qualified Small Business Stock Reporting requirements, How To Report Gains and Losses (Form 6781), How to report gain. Tax software 2005 2006 Rollover of gain from sale of securities, Rollover of Gain From Publicly Traded Securities Short-term, Short-Term or Long-Term Capital Gain or Loss, Short-term gains and losses. Tax software 2005 2006 Tax rates, Capital Gain Tax Rates, Table 4-4. Tax software 2005 2006 What Is Your Maximum Capital Gain Rate? Table 4-4, Table 4-4. Tax software 2005 2006 What Is Your Maximum Capital Gain Rate? Capital loss carryover, Capital loss carryover. Tax software 2005 2006 , Capital Losses Worksheet 4-1, Worksheet 4-1. Tax software 2005 2006 Capital Loss Carryover Worksheet Cash method, Cash method taxpayers. Tax software 2005 2006 , Cash method. Tax software 2005 2006 , When To Deduct Investment Interest Reporting options for savings bond interest, Reporting options for cash method taxpayers. Tax software 2005 2006 Cash-settled options, Cash-settled options. Tax software 2005 2006 Casualty losses, Ordinary loss or casualty loss. Tax software 2005 2006 CDOs (Collateralized debt obligations), Collateralized Debt Obligations (CDOs) Certificates of deposit (CDs), Certificates of Deposit (CDs) Children Alaska Permanent Fund dividends, Child's Alaska Permanent Fund dividends. Tax software 2005 2006 Capital gain distributions, Child's capital gain distributions. Tax software 2005 2006 Custodian account for, Custodian account for your child. Tax software 2005 2006 Gifts to, Income from property given to a child. Tax software 2005 2006 Investment income of, Tax on unearned income of certain children. Tax software 2005 2006 , Investment income of child reported on parent's return. Tax software 2005 2006 Qualified dividends, Child's qualified dividends. Tax software 2005 2006 Savings account with parent as trustee, Savings account with parent as trustee. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 savings bond owner, Child as only owner. Tax software 2005 2006 Clerical help, Clerical help and office rent. Tax software 2005 2006 Co-owners of U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds, Co-owners. Tax software 2005 2006 Collateralized debt obligations (CDOs), Collateralized Debt Obligations (CDOs) Collectibles, Collectibles gain or loss. Tax software 2005 2006 Commissions, Commissions and load charges. Tax software 2005 2006 Commodity futures, Commodity Futures, Commodity futures. Tax software 2005 2006 Community property U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds, Community property. Tax software 2005 2006 Constructive ownership transactions, Constructive ownership of stock. Tax software 2005 2006 , Gains From Certain Constructive Ownership Transactions Constructive receipt, Constructive receipt. Tax software 2005 2006 Constructive sales, Constructive Sales of Appreciated Financial Positions Contractors, insolvency of, Insolvency of contractor. Tax software 2005 2006 Conversion transactions, Conversion Transactions Convertible stocks and bonds, Convertible stocks and bonds. Tax software 2005 2006 Cooperatives, sales of stock to, Sales of Stock to ESOPs or Certain Cooperatives Corporate distributions, Dividends and Other Distributions Capital gain, Capital gain distributions. Tax software 2005 2006 , Child's capital gain distributions. Tax software 2005 2006 , Capital gain distributions received. Tax software 2005 2006 Constructive, Constructive distributions. Tax software 2005 2006 Dividends (see Dividends) Fractional shares, Fractional shares. Tax software 2005 2006 Liquidating, Liquidating Distributions, Liquidating distributions. Tax software 2005 2006 Nondividend, Nondividend Distributions, Nondividend distributions. Tax software 2005 2006 Return of capital, Basis adjustment. Tax software 2005 2006 Stock rights, Distributions of Stock and Stock Rights Undistributed capital gains, Undistributed capital gains of mutual funds and REITs. Tax software 2005 2006 Corporate reorganizations, Corporate reorganizations. Tax software 2005 2006 Cost basis, Cost Basis, Cost Basis Coupon bonds, Coupon bonds. Tax software 2005 2006 D Day traders, Special Rules for Traders in Securities Dealer equity options, Dealer equity option. Tax software 2005 2006 Dealer securities futures contracts, Dealer securities futures contract. Tax software 2005 2006 Debt instruments, retirement of, Retirement of debt instrument. Tax software 2005 2006 Decedents, Appreciated property you gave the decedent. Tax software 2005 2006 , Decedent's capital loss. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 savings bond interest, reporting of, Decedents. Tax software 2005 2006 Demutualization, Demutualization of Life Insurance Companies Deposits, loss on, Deposit in Insolvent or Bankrupt Financial Institution Discount on debt instruments, Discount on Debt Instruments Certificates of deposit, Certificates of Deposit (CDs) Election to report all interest as OID, Election To Report All Interest as OID Face-amount certificates, Face-Amount Certificates Gain or loss treatment, Discounted Debt Instruments Inflation-indexed, Inflation-Indexed Debt Instruments Market discount bonds (see Market discount bonds) Original issue discount (see Original issue discount (OID)) Short-term obligations, Discount on Short-Term Obligations, Short-term government obligations. Tax software 2005 2006 Stripped bonds and coupons, Stripped Bonds and Coupons Discounted debt instruments, Discount on Debt Instruments Discounted tax-exempt obligations, Discounted tax-exempt obligations. Tax software 2005 2006 Dividends, Dividends and Other Distributions, Form 1099-DIV. Tax software 2005 2006 (see also Form 1099-DIV) Alaska Permanent Fund, Alaska Permanent Fund dividends. Tax software 2005 2006 , Child's Alaska Permanent Fund dividends. Tax software 2005 2006 Exempt-interest, Exempt-interest dividends. Tax software 2005 2006 , Exempt-interest dividends. Tax software 2005 2006 , Exempt-interest dividends on mutual fund stock. Tax software 2005 2006 Extraordinary, Extraordinary dividends. Tax software 2005 2006 Holding period, Holding period. Tax software 2005 2006 Insurance policies, Dividends on insurance policies. Tax software 2005 2006 Money market funds, Money Market Funds Nominees, Nominees. Tax software 2005 2006 , Nominees. Tax software 2005 2006 Ordinary, Ordinary Dividends Patronage, Patronage dividends. Tax software 2005 2006 Payments in lieu of, Payments in lieu of dividends. Tax software 2005 2006 Qualified, Qualified Dividends, Qualified dividends. Tax software 2005 2006 , Child's qualified dividends. Tax software 2005 2006 Qualified foreign corporation, Qualified foreign corporation. Tax software 2005 2006 Received in January, Dividends received in January. Tax software 2005 2006 Reinvestment of, Reinvested distributions. Tax software 2005 2006 Reinvestment plans, Dividends Used To Buy More Stock, Automatic investment service and dividend reinvestment plans. Tax software 2005 2006 , Dividend reinvestment plans. Tax software 2005 2006 Reporting requirements, Form 1099-DIV. Tax software 2005 2006 , How To Report Dividend Income, Stripped Preferred Stock Restricted stock, Dividends received on restricted stock. Tax software 2005 2006 Sale or trade vs. Tax software 2005 2006 , Dividend versus sale or trade. Tax software 2005 2006 Scrip, Scrip dividends. Tax software 2005 2006 Sold stock, Dividends on stock sold. Tax software 2005 2006 Stock, Stock dividends. Tax software 2005 2006 , Stock dividends. Tax software 2005 2006 Underreported, Underreported interest and dividends. Tax software 2005 2006 Veterans' insurance, Interest on VA dividends. Tax software 2005 2006 , Dividends on veterans' insurance. Tax software 2005 2006 Divorce, Property Received From Your Spouse, Transfers Between Spouses E Education Savings Bond Program, Education Savings Bond Program Interest excluded under, Interest excluded under the Education Savings Bond Program. Tax software 2005 2006 Recordkeeping requirements, Education Savings Bond Program Employee stock options, Reminders Employee stock ownership plans (ESOPs), sales of stock to, Sales of Stock to ESOPs or Certain Cooperatives Employer identification numbers (EINs), Identifying number. Tax software 2005 2006 Empowerment zone, Exclusion of Gain From DC Zone Assets Endowment contracts, Single-premium life insurance, endowment, and annuity contracts. Tax software 2005 2006 Enterprise zone facility bonds, Enterprise zone facility bonds. Tax software 2005 2006 Equity option, Equity option. Tax software 2005 2006 Estate income received by beneficiary, Beneficiary of an estate or trust. Tax software 2005 2006 Exchanges of mutual fund shares, Exchange of Shares In One Mutual Fund For Shares In Another Mutual Fund Exclusion of gain DC zone assets, Exclusion of Gain From DC Zone Assets Exempt-interest dividends on mutual fund stock, Exempt-interest dividends on mutual fund stock. Tax software 2005 2006 Expenses of producing income, Expenses of Producing Income F Face-amount certificates, Face-Amount Certificates Fair market value, Fair market value. Tax software 2005 2006 , Fair market value less than donor's adjusted basis. Tax software 2005 2006 , Fair market value. Tax software 2005 2006 Federal guarantee on bonds, Federally guaranteed bonds. Tax software 2005 2006 Fees to buy or sell, Fees to buy or sell. Tax software 2005 2006 Financial asset securitization investment trusts (FASITs), FASITs First-in first-out (FIFO), First-in first-out (FIFO). Tax software 2005 2006 Foreign currency transactions, Foreign currency contract. Tax software 2005 2006 Foreign income, Reminders Form 1040, Form 1040. Tax software 2005 2006 , Form 1040A or Form 1040. Tax software 2005 2006 Form 1040, Schedule B, Schedule B (Form 1040A or 1040). Tax software 2005 2006 Form 1040, Schedule D, How to report gain. Tax software 2005 2006 Form 1040A, Form 1040A. Tax software 2005 2006 Form 1040X, Filing a claim for refund. Tax software 2005 2006 Form 1041, Filing requirement. Tax software 2005 2006 Form 1065, Filing requirement. Tax software 2005 2006 Schedule K-1, Schedule K-1 (Form 1065). Tax software 2005 2006 Form 1066, Schedule Q, Schedule Q (Form 1066). Tax software 2005 2006 , Investment expenses from pass-through entities. Tax software 2005 2006 Form 1096, File Form 1099-INT with the IRS. Tax software 2005 2006 , File Form 1099-DIV with the IRS. Tax software 2005 2006 , File Form 1099-B or Form 1099-S with the IRS. Tax software 2005 2006 Form 1099-B, Form 1099-B. Tax software 2005 2006 , Form 1099-B transactions. Tax software 2005 2006 , File Form 1099-B or Form 1099-S with the IRS. Tax software 2005 2006 Form 1099-CAP, Form 1099-CAP transactions. Tax software 2005 2006 Form 1099-DIV, General Information, Form 1099-DIV. Tax software 2005 2006 , Form 1099-DIV. Tax software 2005 2006 , File Form 1099-DIV with the IRS. Tax software 2005 2006 Form 1099-INT, General Information, Form 1099-INT. Tax software 2005 2006 , Form 1099-INT for U. Tax software 2005 2006 S. Tax software 2005 2006 savings bond interest. Tax software 2005 2006 , Form 1099-INT. Tax software 2005 2006 , File Form 1099-INT with the IRS. Tax software 2005 2006 , Forms 1099-INT and 1099-OID. Tax software 2005 2006 , Forms 1099-INT and 1099-OID. Tax software 2005 2006 Form 1099-MISC, Form 1099-MISC. Tax software 2005 2006 , Reporting Substitute Payments Form 1099-OID, Form 1099-OID. Tax software 2005 2006 , Form 1099-OID, Form 1099-OID. Tax software 2005 2006 , Forms 1099-INT and 1099-OID. Tax software 2005 2006 , Forms 1099-INT and 1099-OID. Tax software 2005 2006 Form 1099-S, Form 1099-S transactions. Tax software 2005 2006 , File Form 1099-B or Form 1099-S with the IRS. Tax software 2005 2006 Form 1120, Filing requirement. Tax software 2005 2006 Form 2439, Undistributed capital gains of mutual funds and REITs. Tax software 2005 2006 Form 3115, Change from method 2. Tax software 2005 2006 , Choosing To Amortize, How To Make the Mark-to-Market Election Form 4684, Ordinary loss or casualty loss. Tax software 2005 2006 Form 4797, How to report. Tax software 2005 2006 , Losses on Section 1244 (Small Business) Stock, How to report. Tax software 2005 2006 Form 4952, Form 4952 Form 6198, At-risk rules. Tax software 2005 2006 Form 6781, Form 6781. Tax software 2005 2006 , How to report. Tax software 2005 2006 , How To Report Gains and Losses (Form 6781), Section 1256 contracts and straddles. Tax software 2005 2006 Form 8275, Negligence or disregard of rules or regulations. Tax software 2005 2006 Form 8275-R, Negligence or disregard of rules or regulations. Tax software 2005 2006 Form 8582, Form 8582. Tax software 2005 2006 Form 8615, Tax on unearned income of certain children. Tax software 2005 2006 Form 8815, Form 8815. Tax software 2005 2006 , Figuring the interest part of the proceeds (Form 8815, line 6). Tax software 2005 2006 , Interest excluded under the Education Savings Bond Program. Tax software 2005 2006 Form 8824, How to report. Tax software 2005 2006 Form 8832, Clubs formed before 1997. Tax software 2005 2006 Form 8886, Reportable Transaction Disclosure Statement, Negligence or disregard of rules or regulations. Tax software 2005 2006 Form 8949 Bad debts, How to report bad debts. Tax software 2005 2006 Basis adjustment, Basis adjustment. Tax software 2005 2006 Capital Gains, Reporting Capital Gains and Losses Capital Losses, Reporting Capital Gains and Losses Cooperative, sale to certain, Sales of Stock to ESOPs or Certain Cooperatives Copyrights in musical works, Capital asset treatment for self-created musical works. Tax software 2005 2006 Employee stock ownership plan, sale to, Sales of Stock to ESOPs or Certain Cooperatives Empowerment Zone Assets, Exclusion of Gain From DC Zone Assets Exempt-interest dividends, Exempt-interest dividends on mutual fund stock. Tax software 2005 2006 Form 1099-B, Form 1099-B. Tax software 2005 2006 , Form 1099-B transactions. Tax software 2005 2006 Form 1099-CAP, Form 1099-CAP transactions. Tax software 2005 2006 Form 1099-S, Form 1099-S transactions. Tax software 2005 2006 Fractional shares, Fractional shares. Tax software 2005 2006 Gain, qualified small business stock, How to report gain. Tax software 2005 2006 How to fill in, generally, Reporting Capital Gains and Losses Long-term gains and losses, Long-term gains and losses. Tax software 2005 2006 Marked-to-market election, Mark-to-market election made. Tax software 2005 2006 Market discount bonds, Market discount bonds. Tax software 2005 2006 , Market discount bonds. Tax software 2005 2006 Musical compositions, Capital asset treatment for self-created musical works. Tax software 2005 2006 Nominees, Nominees. Tax software 2005 2006 Nonbusiness bad debt, Nonbusiness bad debt. Tax software 2005 2006 Nondividend distributions, Nondividend distributions. Tax software 2005 2006 Option, How to report. Tax software 2005 2006 Property bought at various times, Sale of property bought at various times. Tax software 2005 2006 Rollover, publicly traded securities, Rollover of Gain From Publicly Traded Securities Rollover, qualified small business stock, How to report gain. Tax software 2005 2006 Sale expenses, Sale expenses. Tax software 2005 2006 Short-term gains and losses, Short-term gains and losses. Tax software 2005 2006 Software, Stocks and Bonds Worthless securities, How to report loss. Tax software 2005 2006 Form SS-4, Identifying number. Tax software 2005 2006 Form W-8BEN, Nonresident aliens. Tax software 2005 2006 Form W-9, Certification. Tax software 2005 2006 Fractional shares, Fractional shares. Tax software 2005 2006 , Automatic investment service. Tax software 2005 2006 Free tax services, Free help with your tax return. Tax software 2005 2006 Frozen deposits, Interest income on frozen deposits. Tax software 2005 2006 , Frozen deposits. Tax software 2005 2006 Futures contracts Regulated, Regulated futures contract. Tax software 2005 2006 Securities, Securities futures contract. Tax software 2005 2006 , Securities futures contract to sell. Tax software 2005 2006 , Securities Futures Contracts Futures, commodity, Commodity Futures, Commodity futures. Tax software 2005 2006 Wash sales, Options and futures contracts. Tax software 2005 2006 G Gains on qualified small business stock, Gains on Qualified Small Business Stock Gains on sales or trades, How To Figure Gain or Loss, Gain on Sale or Trade of Depreciable Property, Property received from a related party. Tax software 2005 2006 (see also Capital gains and losses) Gifts, What's New, Income from property given to a child. Tax software 2005 2006 , Property Received as a Gift, Property received as a gift. Tax software 2005 2006 Gifts of shares, Shares received as gift. Tax software 2005 2006 Government obligations, Government obligations. Tax software 2005 2006 H Hedging transactions, Hedging exception. Tax software 2005 2006 , Hedging Transactions, Hedging transaction. Tax software 2005 2006 Help (see Tax help) Holding period Investment property, Holding Period Replacement stock, Holding period of replacement stock. Tax software 2005 2006 Shares acquired by reinvestment, Reinvested distributions. Tax software 2005 2006 Straddles, Holding Period and Loss Treatment Rules I Income from sources outside U. Tax software 2005 2006 S. Tax software 2005 2006 , Reminders Income tax treaties (Table 1-3), Qualified Dividends Indian tribal government, Indian tribal government. Tax software 2005 2006 Individual retirement arrangements (IRAs) Interest income, Individual retirement arrangements (IRAs). Tax software 2005 2006 Inflation-indexed debt instruments, Inflation-Indexed Debt Instruments, Stripped inflation-indexed debt instruments. Tax software 2005 2006 Inherited property Basis, Property Received as Inheritance Holding period, Inherited property. Tax software 2005 2006 Transfer by inheritance, Transfer by inheritance. Tax software 2005 2006 Insolvency of contractors, Insolvency of contractor. Tax software 2005 2006 Installment sales, Installment sales. Tax software 2005 2006 Insurance Borrowing on, Borrowing on insurance. Tax software 2005 2006 Dividends, interest on, Interest on insurance dividends. Tax software 2005 2006 , Dividends on insurance policies. Tax software 2005 2006 Interest option on, Interest option on insurance. Tax software 2005 2006 Life insurance companies, demutualization, Demutualization of Life Insurance Companies Life, paid to beneficiary, Insurance Prepaid premiums, Prepaid insurance premiums. Tax software 2005 2006 Single-premium life, Single-premium life insurance, endowment, and annuity contracts. Tax software 2005 2006 Trades, Insurance Policies and Annuities Veterans' dividends, interest on, Interest on VA dividends. Tax software 2005 2006 , Dividends on veterans' insurance. Tax software 2005 2006 Interest expenses Allocation of, Allocation of Interest Expense Investment interest, Investment Interest Limit on, Limit on interest deduction for market discount bonds. Tax software 2005 2006 , Limit on Deduction When to deduct, When To Deduct Investment Interest Margin accounts, Interest on margin accounts. Tax software 2005 2006 Paid in advance, Interest paid in advance. Tax software 2005 2006 Straddles, Interest expense and carrying charges on straddles. Tax software 2005 2006 Interest income, Interest Income Annuity contracts, Interest on annuity contract. Tax software 2005 2006 Bonds traded flat, Bonds traded flat. Tax software 2005 2006 Certificates of deposits, Certificates of deposit and other deferred interest accounts. Tax software 2005 2006 Condemnation awards, Interest on condemnation award. Tax software 2005 2006 Deferred interest accounts, Certificates of deposit and other deferred interest accounts. Tax software 2005 2006 Dividends on deposit or share accounts, Dividends that are actually interest. Tax software 2005 2006 Frozen deposits, Interest income on frozen deposits. Tax software 2005 2006 , Frozen deposits. Tax software 2005 2006 Gift for opening account, Gift for opening account. Tax software 2005 2006 Individual retirement arrangements (IRAs), Individual retirement arrangements (IRAs). Tax software 2005 2006 Installment sale payments, Installment sale payments. Tax software 2005 2006 Insurance dividends, Interest on insurance dividends. Tax software 2005 2006 Money market funds, Money market funds. Tax software 2005 2006 Nominee distributions, Nominees. Tax software 2005 2006 Prepaid insurance premiums, Prepaid insurance premiums. Tax software 2005 2006 Reporting, When To Report Interest Income, Penalty on early withdrawal of savings. Tax software 2005 2006 Seller-financed mortgage, Form 1040A. Tax software 2005 2006 , Interest on seller-financed mortgage. Tax software 2005 2006 Tax refunds, Interest on tax refunds. Tax software 2005 2006 Tax-exempt, Tax-Exempt Interest, Reporting tax-exempt interest. Tax software 2005 2006 Taxable, Taxable Interest — General, Bonds traded flat. Tax software 2005 2006 , Taxation of interest. Tax software 2005 2006 , Taxable Interest U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds, person responsible for tax (Table 1-2), Table 1-2. Tax software 2005 2006 Who Pays the Tax on U. Tax software 2005 2006 S. Tax software 2005 2006 Savings Bond Interest Underreported, Underreported interest and dividends. Tax software 2005 2006 Unstated, Unstated interest. Tax software 2005 2006 Usurious interest, Usurious interest. Tax software 2005 2006 VA insurance dividends, Interest on VA dividends. Tax software 2005 2006 Investment clubs, Investment Clubs, Filing requirement. Tax software 2005 2006 Investment counsel and advice, Investment counsel and advice. Tax software 2005 2006 Investment expenses, Investment Expenses Allocated, Allocated investment expenses. Tax software 2005 2006 At-risk rules, At-risk rules. Tax software 2005 2006 Deductible, Expenses of Producing Income Interest, Investment interest deducted. Tax software 2005 2006 Limits on deductions, Limits on Deductions Nondeductible, Nondeductible Expenses Pass-through entities, Investment expenses from pass-through entities. Tax software 2005 2006 Reporting requirements, How To Report Investment Expenses Investment income, Investment Income Children, Tax on unearned income of certain children. Tax software 2005 2006 , Investment income of child reported on parent's return. Tax software 2005 2006 General Information, General Information Net income, Net Investment Income Records to keep, General Information Reporting of (Table 1-1), Table 1-1. Tax software 2005 2006 Where To Report Common Types of Investment Income Investment property, Investment property. Tax software 2005 2006 Basis, Basis of Investment Property Definition, Investment property. Tax software 2005 2006 Gain or loss treatment, Investment property. Tax software 2005 2006 Gift, received as, Property Received as a Gift Holding period, Holding Period Liquidation, received in, Investment property received in liquidation. Tax software 2005 2006 Nontaxable trades, received in, Property Received in Nontaxable Trades Sales and trades, Sales and Trades of Investment Property Services, received for, Property Received for Services Spouse, received from, Property Received From Your Spouse Taxable trades, received in, Property Received in Taxable Trades J Joint accounts, Joint accounts. Tax software 2005 2006 Joint and separate returns, Joint return. Tax software 2005 2006 , Joint and separate returns. Tax software 2005 2006 L Life insurance companies demutualization, Demutualization of Life Insurance Companies Like-kind exchanges, Like-Kind Exchanges, Like-Kind Exchanges Basis of property received, Basis of property received. Tax software 2005 2006 Reporting requirements, How to report. Tax software 2005 2006 Liquidating distributions, Liquidating Distributions, Investment property received in liquidation. Tax software 2005 2006 Listed options, Listed option. Tax software 2005 2006 Load charges, Commissions and load charges. Tax software 2005 2006 Loans Below-market, Below-Market Loans, Effective dates. Tax software 2005 2006 Gift and demand, Gift and demand loans. Tax software 2005 2006 Guarantees, Loan guarantees. Tax software 2005 2006 Term, Term loans. Tax software 2005 2006 Local government obligations (see State or local government obligations) Long-term capital gains and losses, Short-Term or Long-Term Capital Gain or Loss, Long-term gains and losses. Tax software 2005 2006 Long-term debt instruments, Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). Tax software 2005 2006 Losses on sales or trades, Property received from a related party. Tax software 2005 2006 (see also Capital gains and losses) Amount calculation, How To Figure Gain or Loss Carryback election, Loss carryback election. Tax software 2005 2006 , Loss carryback election. Tax software 2005 2006 Mutual fund or REIT stock held 6 months or less, Loss on mutual fund or REIT stock held 6 months or less. Tax software 2005 2006 Passive activities, Passive activity losses. Tax software 2005 2006 , Passive activity losses. Tax software 2005 2006 , Passive activity losses and credits. Tax software 2005 2006 , Losses from passive activities. Tax software 2005 2006 Related parties, Losses on Sales or Trades of Property Section 1244 (small business) stock, Losses on Section 1244 (Small Business) Stock Small business investment company stock, Losses on Small Business Investment Company Stock Wash sales, Coordination of Loss Deferral Rules and Wash Sale Rules M Mark-to-market election, Mark-to-market election made. Tax software 2005 2006 Marked-to-market rules, Marked-to-Market Rules, Mark-to-market election made. Tax software 2005 2006 Market discount bonds, Market discount. Tax software 2005 2006 , Market Discount Bonds, Partial principal payments. Tax software 2005 2006 , Limit on interest deduction for market discount bonds. Tax software 2005 2006 , Market discount on bonds. Tax software 2005 2006 , Market discount bonds. Tax software 2005 2006 , Market discount bonds. Tax software 2005 2006 Accrued market discount, Accrued market discount. Tax software 2005 2006 Maximum rate of capital gains (Table 4-4), Table 4-4. Tax software 2005 2006 What Is Your Maximum Capital Gain Rate? Mechanics' and suppliers' liens, Mechanics' and suppliers' liens. Tax software 2005 2006 Meetings, expenses of attending, Stockholders' meetings. Tax software 2005 2006 Missing children, photographs of, Reminders Mixed straddles, Mixed straddles. Tax software 2005 2006 , Mixed straddles. Tax software 2005 2006 Money market funds, Money Market Funds Interest income, Money market funds. Tax software 2005 2006 Mortgages Revenue bonds, Mortgage revenue bonds. Tax software 2005 2006 Secondary liability on home, Secondary liability on home mortgage. Tax software 2005 2006 Seller-financed, Interest on seller-financed mortgage. Tax software 2005 2006 Municipal bonds, State or Local Government Obligations, Reporting tax-exempt interest. Tax software 2005 2006 , Tax-exempt state and local government bonds. Tax software 2005 2006 (see also State or local government obligations) Mutual funds, Capital Gain Distributions, Other income (nonpassive income). Tax software 2005 2006 , Choosing to include net capital gain. Tax software 2005 2006 , Including mutual fund or REMIC expenses in income. Tax software 2005 2006 , Shares in a mutual fund or REIT. Tax software 2005 2006 , Special Rules for Mutual Funds, Loss on mutual fund or REIT stock held 6 months or less. Tax software 2005 2006 Individual retirement arrangements (IRAs), Qualified retirement plans and IRAs. Tax software 2005 2006 publicly offered, Publicly-offered mutual funds. Tax software 2005 2006 N Net Investment Income Tax, What's New, Net investment income tax (NIIT). Tax software 2005 2006 New York Liberty bonds, New York Liberty bonds. Tax software 2005 2006 NIIT, What's New, Net investment income tax (NIIT). Tax software 2005 2006 Nominee distributions Dividends, Nominees. Tax software 2005 2006 , Nominees. Tax software 2005 2006 Interest income, Nominees. Tax software 2005 2006 , Nominee distributions. Tax software 2005 2006 Original issue discount, Nominee. Tax software 2005 2006 Nonbusiness bad debts, Nonbusiness bad debt. Tax software 2005 2006 , Nonbusiness Bad Debts Noncapital assets, Capital Assets and Noncapital Assets Nondeductible investment expenses, Nondeductible Expenses Nondividend distributions, Nondividend Distributions Nonequity options, Nonequity option. Tax software 2005 2006 Nonqualified preferred stock, Nonqualified preferred stock. Tax software 2005 2006 Nonresident aliens Backup withholding, Nonresident aliens. Tax software 2005 2006 Nontaxable return of capital, Basis adjustment. Tax software 2005 2006 Nontaxable stock rights, Nontaxable stock rights. Tax software 2005 2006 Nontaxable trades, Nontaxable Trades, Nontaxable trades. Tax software 2005 2006 Notes Individuals, bought at discount, Notes of individuals. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury (see U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury bills, notes, and bonds) O Office expenses, Clerical help and office rent. Tax software 2005 2006 Options, Options Calls and puts, Puts and Calls Cash settlement, Cash-settled options. Tax software 2005 2006 , Cash settlement option. Tax software 2005 2006 Dealer equity, Dealer equity option. Tax software 2005 2006 Deep-in-the-money, Qualified covered call options and optioned stock. Tax software 2005 2006 Employee stock, Reminders Equity, Equity option. Tax software 2005 2006 Gain or loss, Options, Qualified covered call options and optioned stock. Tax software 2005 2006 Holding period, Option exercised. Tax software 2005 2006 Listed, Listed option. Tax software 2005 2006 Nonequity, Nonequity option. Tax software 2005 2006 Qualified covered call, Qualified covered call options and optioned stock. Tax software 2005 2006 Reporting requirements, How to report. Tax software 2005 2006 Section 1256 contracts, Section 1256 Contracts Marked to Market, Section 1256 contract options. Tax software 2005 2006 Wash sales, Options and futures contracts. Tax software 2005 2006 Ordinary gains and losses, Capital or Ordinary Gain or Loss, Ordinary loss or casualty loss. Tax software 2005 2006 Original issue discount (OID), Original issue discount. Tax software 2005 2006 , Original Issue Discount (OID), Stripped tax-exempt obligations. Tax software 2005 2006 , Original issue discount (OID) on debt instruments. Tax software 2005 2006 Adjustment to, Original issue discount (OID) adjustment. Tax software 2005 2006 Reporting requirements, Exceptions to reporting OID. Tax software 2005 2006 , Form 1099-OID Rules, Applying the OID Rules P Pass-through entities Rollover of gain, Pass-through entity. Tax software 2005 2006 Passive activities Gains and losses, Passive activity losses. Tax software 2005 2006 , Passive activity losses. Tax software 2005 2006 , Passive activity losses and credits. Tax software 2005 2006 , Losses from passive activities. Tax software 2005 2006 , Passive activity gains and losses. Tax software 2005 2006 Patronage dividends, Patronage dividends. Tax software 2005 2006 Penalties Accuracy-related, Accuracy-related penalty. Tax software 2005 2006 , Accuracy-related penalties. Tax software 2005 2006 Backup withholding, Penalties. Tax software 2005 2006 Civil fraud, Civil fraud penalty. Tax software 2005 2006 Early withdrawal, Interest subject to penalty for early withdrawal. Tax software 2005 2006 , Penalty on early withdrawal of savings. Tax software 2005 2006 Failure to pay tax, Failure to pay tax. Tax software 2005 2006 Failure to supply SSN, Penalty for failure to supply SSN. Tax software 2005 2006 Substantial understatement, Substantial understatement of tax. Tax software 2005 2006 Valuation misstatement, Substantial valuation misstatement. Tax software 2005 2006 Political parties Debts owed by, Debts owed by political parties. Tax software 2005 2006 Preferred stock Nonqualified, Nonqualified preferred stock. Tax software 2005 2006 Redeemable at a premium, Preferred stock redeemable at a premium. Tax software 2005 2006 Stripped, Stripped Preferred Stock Premiums on bonds, Bond premium. Tax software 2005 2006 , Premiums on bonds. Tax software 2005 2006 Private activity bonds, Private activity bonds. Tax software 2005 2006 Public utility stock reinvestment, Public utilities. Tax software 2005 2006 Publications (see Tax help) Puts and calls, Puts and Calls Table 4-3, Table 4-3. Tax software 2005 2006 Puts and Calls Q Qualified dividends, Qualified dividends. Tax software 2005 2006 Qualified small business stock, Qualified small business stock. Tax software 2005 2006 , Qualified small business stock. Tax software 2005 2006 , Gains on Qualified Small Business Stock Gains on, Gains on Qualified Small Business Stock R Real estate investment trusts (REITs), Undistributed capital gains of mutual funds and REITs. Tax software 2005 2006 , Shares in a mutual fund or REIT. Tax software 2005 2006 , Loss on mutual fund or REIT stock held 6 months or less. Tax software 2005 2006 Real estate mortgage investment conduits (REMICs), REMICs, Expenses. Tax software 2005 2006 , Including mutual fund or REMIC expenses in income. Tax software 2005 2006 Regular interest, Regular Interest Residual interest, Residual Interest, Residual interests in a REMIC. Tax software 2005 2006 Recordkeeping requirements Education Savings Bond Program, Education Savings Bond Program Investment income, General Information Small business stock, Losses on Section 1244 (Small Business) Stock Redemption of stock, Redemption of stock. Tax software 2005 2006 Redemption or retirement of bonds, Redemption or retirement of bonds. Tax software 2005 2006 Regulated futures contract, Regulated futures contract. Tax software 2005 2006 Reinvestment rights, Commissions and load charges. Tax software 2005 2006 REITs (see Real estate investment trusts (REITs)) Related party transactions, Unpaid expenses owed to related party. Tax software 2005 2006 , Related Party Transactions, Property received from a related party. Tax software 2005 2006 Related persons, Related persons. Tax software 2005 2006 REMICs (see Real estate mortgage investment conduits (REMICs)) Reorganizations, corporate, Corporate reorganizations. Tax software 2005 2006 Reporting requirements Bad debts, How to report bad debts. Tax software 2005 2006 Bond premium amortization, How To Report Amortization Capital gains and losses, How To Report Gains and Losses (Form 6781), How to report gain. Tax software 2005 2006 , Reporting Capital Gains and Losses Dividend income, How To Report Dividend Income Exempt-interest dividends, Information reporting requirement. Tax software 2005 2006 Interest on U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds, Reporting options for cash method taxpayers. Tax software 2005 2006 , Choice to report interest each year. Tax software 2005 2006 Investment expenses, How To Report Investment Expenses Like-kind exchanges, How to report. Tax software 2005 2006 Options, How to report. Tax software 2005 2006 Original issue discount, Form 1099-OID S corporation income, deductions, and credits, Reporting S corporation income, deductions, and credits. Tax software 2005 2006 Section 1256 contracts, How To Report State or local government obligations, Information reporting requirement. Tax software 2005 2006 Straddles, Section 1256 contracts and straddles. Tax software 2005 2006 Substitute payments, Reporting Substitute Payments Tax-exempt interest income, Reporting tax-exempt interest. Tax software 2005 2006 Trades, How To Report Repossession of real property, Real property repossessed. Tax software 2005 2006 Restricted property, Restricted property. Tax software 2005 2006 Restricted stock, Dividends received on restricted stock. Tax software 2005 2006 Retirement of debt instrument, Retirement of debt instrument. Tax software 2005 2006 Return of capital (see Nondividend distributions) Revocable trust, trustee's commissions for, Trustee's commissions for revocable trust. Tax software 2005 2006 Rollover of gain from sale Securities, Rollover of Gain From Publicly Traded Securities, Rollover of Gain S S corporations, S Corporations, S corporation stock. Tax software 2005 2006 Safe deposit box, Safe deposit box rent. Tax software 2005 2006 Sales and trades of investment property, Sales and Trades of Investment Property Definition, What Is a Sale or Trade? Savings bonds (see U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds) SBIC stock (see Small business investment company stock) Scrip dividends, Scrip dividends. Tax software 2005 2006 Section 1202 gain, Section 1202 Exclusion, Gain on qualified small business stock. Tax software 2005 2006 Section 1244 stock, Losses on Section 1244 (Small Business) Stock Section 1250 gain, Unrecaptured section 1250 gain. Tax software 2005 2006 Section 1256 contracts, Section 1256 Contracts Marked to Market, Section 1256 contracts. Tax software 2005 2006 , Section 1256 contract options. Tax software 2005 2006 , Section 1256 contracts and straddles. Tax software 2005 2006 Net gain on, Net section 1256 contracts gain. Tax software 2005 2006 Net loss on, Net section 1256 contracts loss. Tax software 2005 2006 Reporting requirements, How To Report Securities Holding period, Holding Period Installment sales, Installment sales. Tax software 2005 2006 Lost, stolen, etc. Tax software 2005 2006 , cost of replacing, Cost of replacing missing securities. Tax software 2005 2006 Rollover of gain from sale, Rollover of Gain From Publicly Traded Securities, Rollover of Gain Traders in, Special Rules for Traders in Securities Worthless, Worthless Securities, Worthless securities. Tax software 2005 2006 Securities futures contracts, Dealer securities futures contract. Tax software 2005 2006 , Securities futures contract. Tax software 2005 2006 , Securities Futures Contracts Self-employment income, Self-Employment Income Self-employment tax, Self-employment tax. Tax software 2005 2006 Seller-financed mortgages, Interest on seller-financed mortgage. Tax software 2005 2006 Short sales, Short Sales, Extraordinary dividends. Tax software 2005 2006 Adjusted basis, Short sales. Tax software 2005 2006 Expenses of, Short-sale expenses. Tax software 2005 2006 Extraordinary dividends, Extraordinary dividends. Tax software 2005 2006 Puts, Put option as short sale. Tax software 2005 2006 Small business investment company stock, Short sale. Tax software 2005 2006 Short-term capital gains and losses, Short-Term or Long-Term Capital Gain or Loss, Short-term gains and losses. Tax software 2005 2006 Short-term obligations, Discount on Short-Term Obligations, Choosing to include accrued discount and other interest in current income. Tax software 2005 2006 , Acquisition discount on short-term obligations. Tax software 2005 2006 , Short-term government obligations. Tax software 2005 2006 Interest deduction, limit on, Limit on interest deduction for short-term obligations. Tax software 2005 2006 Sixty/forty (60/40) rule, 60/40 rule. Tax software 2005 2006 Small business investment company stock, Losses on Small Business Investment Company Stock, SSBIC stock. Tax software 2005 2006 Reporting requirements, How to report. Tax software 2005 2006 Small business stock, Qualified small business stock. Tax software 2005 2006 , Losses on Section 1244 (Small Business) Stock, Qualified small business stock. Tax software 2005 2006 , Gains on Qualified Small Business Stock Social security number (SSN) Custodial accounts, Custodian account for your child. Tax software 2005 2006 Joint accounts, SSN for joint account. Tax software 2005 2006 Requirement to give, Social security number (SSN). Tax software 2005 2006 Specialized small business investment company stock, Specialized small business investment company stock or partnership interest. Tax software 2005 2006 , SSBIC stock. Tax software 2005 2006 Spouses Transfers between, Property Received From Your Spouse, Transfers Between Spouses (see also Related party transactions) State or local government obligations, State or Local Government Obligations, Taxable Interest Market discount bonds (see Market discount bonds) Private activity bonds, Private activity bonds. Tax software 2005 2006 Registration requirement, Registration requirement. Tax software 2005 2006 Tax-exempt interest, Tax-Exempt Interest Taxable interest, Taxable Interest Stock Basis, Basis adjustment. Tax software 2005 2006 , Basis adjustment. Tax software 2005 2006 , Basis. Tax software 2005 2006 , Stocks and Bonds, Basis of replacement stock. Tax software 2005 2006 Capital asset, Stocks, stock rights, and bonds. Tax software 2005 2006 Constructive ownership, Constructive ownership of stock. Tax software 2005 2006 Convertible, Convertible stocks and bonds. Tax software 2005 2006 Corporate, Corporate Stocks Dividends (see Dividends) Fractional shares, Fractional shares. Tax software 2005 2006 , Automatic investment service. Tax software 2005 2006 Identification, Identifying stock or bonds sold. Tax software 2005 2006 Installment sales, Installment sales. Tax software 2005 2006 Nonqualified preferred stock, Nonqualified preferred stock. Tax software 2005 2006 Options for employees, Reminders Public utility, reinvestment, Public utilities. Tax software 2005 2006 Redemption of, Redemption of stock. Tax software 2005 2006 Replacement stock, Basis of replacement stock. Tax software 2005 2006 Restricted stock, Dividends received on restricted stock. Tax software 2005 2006 Rights, Distributions of Stock and Stock Rights, Stock rights. Tax software 2005 2006 , Nontaxable stock rights. Tax software 2005 2006 S corporations, S corporation stock. Tax software 2005 2006 Sales to ESOPs or cooperatives, Sales of Stock to ESOPs or Certain Cooperatives Small business, Qualified small business stock. Tax software 2005 2006 , Qualified small business stock. Tax software 2005 2006 Specialized small business investment company, Specialized small business investment company stock or partnership interest. Tax software 2005 2006 Splits, Stock splits. Tax software 2005 2006 Straddles (see Straddles) Stripped preferred stock, Stripped Preferred Stock Surrender of, Surrender of stock. Tax software 2005 2006 Trades, Stock for stock of the same corporation. Tax software 2005 2006 Trust instruments treated as, Certain trust instruments treated as stock. Tax software 2005 2006 Straddles, Straddles, Interest expense and carrying charges relating to mixed straddle account positions. Tax software 2005 2006 Holding period, Holding Period and Loss Treatment Rules Interest expense and carrying charges, Interest expense and carrying charges on straddles. Tax software 2005 2006 Loss deferral rules, Loss Deferral Rules Mixed, Mixed straddles. Tax software 2005 2006 , Mixed straddles. Tax software 2005 2006 , Mixed Straddle Elections Reporting requirements, Section 1256 contracts and straddles. Tax software 2005 2006 Stripped bonds and coupons, Stripped bonds or coupons. Tax software 2005 2006 , Stripped Bonds and Coupons, Stripped tax-exempt obligation. Tax software 2005 2006 Stripped preferred stock, Stripped Preferred Stock Substitute payments, Reporting Substitute Payments T Tables Capital gains maximum rate (Table 4-4), Table 4-4. Tax software 2005 2006 What Is Your Maximum Capital Gain Rate? Income tax treaties (Table 1-3), Qualified Dividends Investment income, reporting of (Table 1-1), Table 1-1. Tax software 2005 2006 Where To Report Common Types of Investment Income Puts and calls (Table 4-3), Table 4-3. Tax software 2005 2006 Puts and Calls U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds, person responsible for tax (Table 1-2), Table 1-2. Tax software 2005 2006 Who Pays the Tax on U. Tax software 2005 2006 S. Tax software 2005 2006 Savings Bond Interest Tax credit bonds, Tax credit bonds. Tax software 2005 2006 Tax help, How To Get Tax Help Tax rates, What's New Capital gain and losses, Capital Gain Tax Rates Tax refunds Interest on, Interest on tax refunds. Tax software 2005 2006 Tax shelters, Tax Shelters and Other Reportable Transactions, Whether To Invest Penalties, Penalties Reporting requirements, Investor Reporting Rules to curb abuse, Rules To Curb Abusive Tax Shelters Tax-exempt bonds, Tax-exempt state and local government bonds. Tax software 2005 2006 Tax-exempt income Expenses of, Tax-exempt income. Tax software 2005 2006 Interest, Tax-Exempt Interest, Reporting tax-exempt interest. Tax software 2005 2006 Tax-exempt obligations, Tax-Exempt Interest, Stripped tax-exempt obligations. Tax software 2005 2006 , Discounted tax-exempt obligations. Tax software 2005 2006 Taxable income, expenses of, Expenses for both tax-exempt and taxable income. Tax software 2005 2006 Taxes State and local transfer, State and local transfer taxes. Tax software 2005 2006 State income, State income taxes. Tax software 2005 2006 Term loans, Term loans. Tax software 2005 2006 Trade or business, Passive activity. Tax software 2005 2006 Traders in securities, Special Rules for Traders in Securities Trades Insurance, Insurance Policies and Annuities Investment property, Sales and Trades of Investment Property Like-kind, Like-Kind Exchanges, Like-Kind Exchanges Nontaxable, Property Received in Nontaxable Trades, Nontaxable Trades, Nontaxable trades. Tax software 2005 2006 Reporting requirements, How To Report Stock, Stock for stock of the same corporation. Tax software 2005 2006 Taxable, Property Received in Taxable Trades U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury notes or bonds, U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury Notes or Bonds Treasury bills, notes, and bonds (see U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury bills, notes, and bonds) Treasury inflation-indexed securities, Inflation-Indexed Debt Instruments Treasury inflation-protected securities (TIPS), Treasury inflation-protected securities (TIPS). Tax software 2005 2006 , Inflation-Indexed Debt Instruments Treaties, income tax (Table 1-3), Qualified Dividends Trust income received by beneficiary, Beneficiary of an estate or trust. Tax software 2005 2006 Trustee's commission for revocable trust, Trustee's commissions for revocable trust. Tax software 2005 2006 U U. Tax software 2005 2006 S. Tax software 2005 2006 savings bonds, U. Tax software 2005 2006 S. Tax software 2005 2006 obligations. Tax software 2005 2006 , U. Tax software 2005 2006 S. Tax software 2005 2006 Savings Bonds Reporting interest on, U. Tax software 2005 2006 S. Tax software 2005 2006 obligations. Tax software 2005 2006 , U. Tax software 2005 2006 S. Tax software 2005 2006 Savings Bonds Retirement or profit-sharing plan, distributed from, Savings bonds distributed from a retirement or profit-sharing plan. Tax software 2005 2006 Worksheet, Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Tax software 2005 2006 Tax, responsible person (Table 1-2), Table 1-2. Tax software 2005 2006 Who Pays the Tax on U. Tax software 2005 2006 S. Tax software 2005 2006 Savings Bond Interest U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury bills, notes, and bonds, U. Tax software 2005 2006 S. Tax software 2005 2006 obligations. Tax software 2005 2006 , U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury Bills, Notes, and Bonds, U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury Notes or Bonds, U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury notes and bonds. Tax software 2005 2006 Undistributed capital gains, Undistributed capital gains. Tax software 2005 2006 Usurious interest, Usurious interest. Tax software 2005 2006 V Veterans' insurance Dividends on, Dividends on veterans' insurance. Tax software 2005 2006 W Warrants, Warrants. Tax software 2005 2006 Wash sales, Wash Sales, Securities Futures Contracts Holding period, Wash sales. Tax software 2005 2006 Loss deferral rules, straddles, Coordination of Loss Deferral Rules and Wash Sale Rules Withholding, backup, Backup withholding. Tax software 2005 2006 Worksheets Capital loss carryover, Worksheet 4-1. Tax software 2005 2006 Capital Loss Carryover Worksheet Worthless securities, Worthless Securities, Worthless securities. 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Page Last Reviewed or Updated: 13-Nov-2013

The Tax Software 2005 2006

Tax software 2005 2006 4. Tax software 2005 2006   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. Tax software 2005 2006 Resident aliens are generally taxed in the same way as U. Tax software 2005 2006 S. Tax software 2005 2006 citizens. Tax software 2005 2006 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business and how it is taxed. Tax software 2005 2006 Topics - This chapter discusses: Income that is effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 Income that is not effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 Interrupted period of residence. Tax software 2005 2006 Expatriation tax. Tax software 2005 2006 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. Tax software 2005 2006 Resident Aliens Resident aliens are generally taxed in the same way as U. Tax software 2005 2006 S. Tax software 2005 2006 citizens. Tax software 2005 2006 This means that their worldwide income is subject to U. Tax software 2005 2006 S. Tax software 2005 2006 tax and must be reported on their U. Tax software 2005 2006 S. Tax software 2005 2006 tax return. Tax software 2005 2006 Income of resident aliens is subject to the graduated tax rates that apply to U. Tax software 2005 2006 S. Tax software 2005 2006 citizens. Tax software 2005 2006 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. Tax software 2005 2006 S. Tax software 2005 2006 citizens. Tax software 2005 2006 Nonresident Aliens A nonresident alien's income that is subject to U. Tax software 2005 2006 S. Tax software 2005 2006 income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). Tax software 2005 2006 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Tax software 2005 2006 These are the same rates that apply to U. Tax software 2005 2006 S. Tax software 2005 2006 citizens and residents. Tax software 2005 2006 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Tax software 2005 2006 If you were formerly a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen or resident alien, these rules may not apply. Tax software 2005 2006 See Expatriation Tax, later, in this chapter. Tax software 2005 2006 Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Tax software 2005 2006 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. Tax software 2005 2006 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. Tax software 2005 2006 Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. Tax software 2005 2006 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. Tax software 2005 2006 For more information, see Services Performed for Foreign Employer in chapter 3. Tax software 2005 2006 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. Tax software 2005 2006 Students and trainees. Tax software 2005 2006   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. Tax software 2005 2006 A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Tax software 2005 2006 The taxable part of any scholarship or fellowship grant that is U. Tax software 2005 2006 S. Tax software 2005 2006 source income is treated as effectively connected with a trade or business in the United States. Tax software 2005 2006 Business operations. Tax software 2005 2006   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. Tax software 2005 2006 Partnerships. Tax software 2005 2006   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. Tax software 2005 2006 Beneficiary of an estate or trust. Tax software 2005 2006   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. Tax software 2005 2006 Trading in stocks, securities, and commodities. Tax software 2005 2006   If your only U. Tax software 2005 2006 S. Tax software 2005 2006 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. Tax software 2005 2006 S. Tax software 2005 2006 resident broker or other agent, you are not engaged in a trade or business in the United States. Tax software 2005 2006   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. Tax software 2005 2006   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. Tax software 2005 2006   This discussion does not apply if you have a U. Tax software 2005 2006 S. Tax software 2005 2006 office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. Tax software 2005 2006 Trading for a nonresident alien's own account. Tax software 2005 2006   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. Tax software 2005 2006 S. Tax software 2005 2006 business activity. Tax software 2005 2006 This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. Tax software 2005 2006   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. Tax software 2005 2006 This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Tax software 2005 2006 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . Tax software 2005 2006 Effectively Connected Income If you are engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. Tax software 2005 2006 This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. Tax software 2005 2006 Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. Tax software 2005 2006 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. Tax software 2005 2006 For a discussion of these rules, see Foreign Income , later. Tax software 2005 2006 Investment Income Investment income from U. Tax software 2005 2006 S. Tax software 2005 2006 sources that may or may not be treated as effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business generally falls into the following three categories. Tax software 2005 2006 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. Tax software 2005 2006 ). Tax software 2005 2006 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. Tax software 2005 2006 Timber, coal, or domestic iron ore with a retained economic interest. Tax software 2005 2006 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. Tax software 2005 2006 Patents transferred before October 5, 1966. Tax software 2005 2006 Original issue discount obligations. Tax software 2005 2006 Capital gains (and losses). Tax software 2005 2006 Use the two tests, described next, to determine whether an item of U. Tax software 2005 2006 S. Tax software 2005 2006 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. Tax software 2005 2006 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. Tax software 2005 2006 Asset-use test. Tax software 2005 2006   This test usually applies to income that is not directly produced by trade or business activities. Tax software 2005 2006 Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. Tax software 2005 2006   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. Tax software 2005 2006 Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. Tax software 2005 2006 Business-activities test. Tax software 2005 2006   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. Tax software 2005 2006 The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. Tax software 2005 2006 Under this test, if the conduct of the U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business was a material factor in producing the income, the income is considered effectively connected. Tax software 2005 2006 Personal Service Income You usually are engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business when you perform personal services in the United States. Tax software 2005 2006 Personal service income you receive in a tax year in which you are engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business is effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Tax software 2005 2006 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. Tax software 2005 2006 The income may be paid to you in the form of cash, services, or property. Tax software 2005 2006 If you are engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. Tax software 2005 2006 However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. Tax software 2005 2006 Pensions. Tax software 2005 2006   If you were a nonresident alien engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. Tax software 2005 2006 This is true whether or not you are engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business in the year you receive the retirement pay. Tax software 2005 2006 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. Tax software 2005 2006 You had a fixed place of business in the United States involved in earning the income. Tax software 2005 2006 At least 90% of your U. Tax software 2005 2006 S. Tax software 2005 2006 source transportation income is attributable to regularly scheduled transportation. Tax software 2005 2006 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. Tax software 2005 2006 “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. Tax software 2005 2006 This definition applies to both scheduled and chartered air transportation. Tax software 2005 2006 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. Tax software 2005 2006 See Transportation Tax, later, in this chapter. Tax software 2005 2006 Business Profits and Losses and Sales Transactions All profits or losses from U. Tax software 2005 2006 S. Tax software 2005 2006 sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. Tax software 2005 2006 For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. Tax software 2005 2006 A share of U. Tax software 2005 2006 S. Tax software 2005 2006 source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. Tax software 2005 2006 Real Property Gain or Loss Gains and losses from the sale or exchange of U. Tax software 2005 2006 S. Tax software 2005 2006 real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. Tax software 2005 2006 You must treat the gain or loss as effectively connected with that trade or business. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest. Tax software 2005 2006   This is any interest in real property located in the United States or the U. Tax software 2005 2006 S. Tax software 2005 2006 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. Tax software 2005 2006 S. Tax software 2005 2006 real property holding corporation. Tax software 2005 2006 Real property includes the following. Tax software 2005 2006 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. Tax software 2005 2006 Improvements on land, including buildings, other permanent structures, and their structural components. Tax software 2005 2006 Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 real property holding corporation. Tax software 2005 2006   A corporation is a U. Tax software 2005 2006 S. Tax software 2005 2006 real property holding corporation if the fair market value of the corporation's U. Tax software 2005 2006 S. Tax software 2005 2006 real property interests are at least 50% of the total fair market value of: The corporation's U. Tax software 2005 2006 S. Tax software 2005 2006 real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. Tax software 2005 2006   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business unless you establish that the corporation is not a U. Tax software 2005 2006 S. Tax software 2005 2006 real property holding corporation. Tax software 2005 2006   A U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. Tax software 2005 2006 An interest in a foreign corporation owning U. Tax software 2005 2006 S. Tax software 2005 2006 real property generally is not a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest unless the corporation chooses to be treated as a domestic corporation. Tax software 2005 2006 Qualified investment entities. Tax software 2005 2006   Special rules apply to qualified investment entities (QIEs). Tax software 2005 2006 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. Tax software 2005 2006 S. Tax software 2005 2006 real property holding corporation. Tax software 2005 2006    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest is treated as a U. Tax software 2005 2006 S. Tax software 2005 2006 real property gain by the shareholder receiving the distribution. Tax software 2005 2006 A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. Tax software 2005 2006 A distribution that you do not treat as gain from the sale or exchange of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest is included in your gross income as a regular dividend. Tax software 2005 2006 Note. Tax software 2005 2006 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. Tax software 2005 2006 S. Tax software 2005 2006 real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. Tax software 2005 2006 Domestically controlled QIE. Tax software 2005 2006   The sale of an interest in a domestically controlled QIE is not the sale of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest. Tax software 2005 2006 The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. Tax software 2005 2006 The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. Tax software 2005 2006 Wash sale. Tax software 2005 2006    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. Tax software 2005 2006 An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. Tax software 2005 2006 If this occurs, you are treated as having gain from the sale or exchange of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. Tax software 2005 2006 This also applies to any substitute dividend payment. Tax software 2005 2006   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. Tax software 2005 2006 Alternative minimum tax. Tax software 2005 2006   There may be a minimum tax on your net gain from the disposition of U. Tax software 2005 2006 S. Tax software 2005 2006 real property interests. Tax software 2005 2006 Figure the amount of this tax, if any, on Form 6251. Tax software 2005 2006 Withholding of tax. Tax software 2005 2006   If you dispose of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest, the buyer may have to withhold tax. Tax software 2005 2006 See the discussion of Tax Withheld on Real Property Sales in chapter 8. Tax software 2005 2006 Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Tax software 2005 2006 An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Tax software 2005 2006 The three kinds of foreign source income are listed below. Tax software 2005 2006 Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. Tax software 2005 2006 Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. Tax software 2005 2006 Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. Tax software 2005 2006 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Tax software 2005 2006 Income, gain, or loss from the sale outside the United States, through the U. Tax software 2005 2006 S. Tax software 2005 2006 office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Tax software 2005 2006 Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. Tax software 2005 2006 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 For example, foreign source interest and dividend equivalents are treated as U. Tax software 2005 2006 S. Tax software 2005 2006 effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. Tax software 2005 2006 Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. Tax software 2005 2006 S. Tax software 2005 2006 citizens and residents. Tax software 2005 2006 Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. Tax software 2005 2006 However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. Tax software 2005 2006 Example. Tax software 2005 2006 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. Tax software 2005 2006 S. Tax software 2005 2006 office of his overseas employer. Tax software 2005 2006 He worked in the U. Tax software 2005 2006 S. Tax software 2005 2006 office until December 25, 2012, but did not leave this country until January 11, 2013. Tax software 2005 2006 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. Tax software 2005 2006 All of Ted's income during his stay here is U. Tax software 2005 2006 S. Tax software 2005 2006 source income. Tax software 2005 2006 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. Tax software 2005 2006 Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. Tax software 2005 2006 The salary payment Ted received in January 2013 is U. Tax software 2005 2006 S. Tax software 2005 2006 source income to him in 2013. Tax software 2005 2006 It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. Tax software 2005 2006 Real property income. Tax software 2005 2006   You may be able to choose to treat all income from real property as effectively connected. Tax software 2005 2006 See Income From Real Property , later, in this chapter. Tax software 2005 2006 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. Tax software 2005 2006 S. Tax software 2005 2006 sources but only if the items are not effectively connected with your U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. Tax software 2005 2006 S. Tax software 2005 2006 source fixed or determinable annual or periodic gains, profits, or income. Tax software 2005 2006 Income is fixed when it is paid in amounts known ahead of time. Tax software 2005 2006 Income is determinable whenever there is a basis for figuring the amount to be paid. Tax software 2005 2006 Income can be periodic if it is paid from time to time. Tax software 2005 2006 It does not have to be paid annually or at regular intervals. Tax software 2005 2006 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. Tax software 2005 2006 Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. Tax software 2005 2006 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Tax software 2005 2006 Other items of income, such as royalties, also may be subject to the 30% tax. Tax software 2005 2006 Some fixed or determinable income may be exempt from U. Tax software 2005 2006 S. Tax software 2005 2006 tax. Tax software 2005 2006 See chapter 3 if you are not sure whether the income is taxable. Tax software 2005 2006 Original issue discount (OID). Tax software 2005 2006   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. Tax software 2005 2006 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. Tax software 2005 2006 The 30% tax applies in the following circumstances. Tax software 2005 2006 You received a payment on a debt instrument. Tax software 2005 2006 In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. Tax software 2005 2006 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. Tax software 2005 2006 You sold or exchanged the debt instrument. Tax software 2005 2006 The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. Tax software 2005 2006   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. Tax software 2005 2006 S. Tax software 2005 2006 Source Income Subject to Withholding, if you bought the debt instrument at original issue. Tax software 2005 2006 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. Tax software 2005 2006 You bought the debt instrument at a premium or paid an acquisition premium. Tax software 2005 2006 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. Tax software 2005 2006 S. Tax software 2005 2006 Treasury securities). Tax software 2005 2006 The debt instrument is a contingent payment or inflation-indexed debt instrument. Tax software 2005 2006 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. Tax software 2005 2006   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. Tax software 2005 2006 See chapter 12. Tax software 2005 2006 Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business and is not exempted by treaty. Tax software 2005 2006 However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. Tax software 2005 2006 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 Social Security Benefits A nonresident alien must include 85% of any U. Tax software 2005 2006 S. Tax software 2005 2006 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. Tax software 2005 2006 S. Tax software 2005 2006 source fixed or determinable annual or periodic income. Tax software 2005 2006 Social security benefits include monthly retirement, survivor, and disability benefits. Tax software 2005 2006 This income is exempt under some tax treaties. Tax software 2005 2006 See Table 1 in Publication 901, U. Tax software 2005 2006 S. Tax software 2005 2006 Tax Treaties, for a list of tax treaties that exempt U. Tax software 2005 2006 S. Tax software 2005 2006 social security benefits from U. Tax software 2005 2006 S. Tax software 2005 2006 tax. Tax software 2005 2006 Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. Tax software 2005 2006 They apply even if you are engaged in a trade or business in the United States. Tax software 2005 2006 These rules do not apply to the sale or exchange of a U. Tax software 2005 2006 S. Tax software 2005 2006 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. Tax software 2005 2006 See Real Property Gain or Loss , earlier, under Effectively Connected Income. Tax software 2005 2006 A capital asset is everything you own except: Inventory. Tax software 2005 2006 Business accounts or notes receivable. Tax software 2005 2006 Depreciable property used in a trade or business. Tax software 2005 2006 Real property used in a trade or business. Tax software 2005 2006 Supplies regularly used in a trade or business. Tax software 2005 2006 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. Tax software 2005 2006 Certain U. Tax software 2005 2006 S. Tax software 2005 2006 government publications. Tax software 2005 2006 Certain commodities derivative financial instruments held by a commodities derivatives dealer. Tax software 2005 2006 Hedging transactions. Tax software 2005 2006 A capital gain is a gain on the sale or exchange of a capital asset. Tax software 2005 2006 A capital loss is a loss on the sale or exchange of a capital asset. Tax software 2005 2006 If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. Tax software 2005 2006 S. Tax software 2005 2006 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. Tax software 2005 2006 You may want to read Publication 544. Tax software 2005 2006 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. Tax software 2005 2006 Specific tax treatment that applies to U. Tax software 2005 2006 S. Tax software 2005 2006 citizens or residents generally does not apply to you. Tax software 2005 2006 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. Tax software 2005 2006 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. Tax software 2005 2006 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. Tax software 2005 2006 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. Tax software 2005 2006 Gains on the sale or exchange of original issue discount obligations. Tax software 2005 2006 Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 See Income From Real Property , later. Tax software 2005 2006 183-day rule. Tax software 2005 2006   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. Tax software 2005 2006 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. Tax software 2005 2006 S. Tax software 2005 2006 sources over your capital losses from U. Tax software 2005 2006 S. Tax software 2005 2006 sources. Tax software 2005 2006 This rule applies even if any of the transactions occurred while you were not in the United States. Tax software 2005 2006   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. Tax software 2005 2006   In arriving at your net gain, do not take the following into consideration. Tax software 2005 2006 The four types of gains listed earlier. Tax software 2005 2006 The deduction for a capital loss carryover. Tax software 2005 2006 Capital losses in excess of capital gains. Tax software 2005 2006 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). Tax software 2005 2006 Losses from the sale or exchange of property held for personal use. Tax software 2005 2006 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). Tax software 2005 2006 See Itemized Deductions in chapter 5. Tax software 2005 2006   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Tax software 2005 2006 Also, you must file your tax return on a calendar-year basis. Tax software 2005 2006   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. Tax software 2005 2006 Reporting. Tax software 2005 2006   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. Tax software 2005 2006 Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. Tax software 2005 2006 Attach them to Form 1040NR. Tax software 2005 2006 Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. Tax software 2005 2006 The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. Tax software 2005 2006 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. Tax software 2005 2006 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. Tax software 2005 2006 You can make this choice only for real property income that is not otherwise effectively connected with your U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. Tax software 2005 2006 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business, as being engaged in a trade or business in the United States during the year. Tax software 2005 2006 Example. Tax software 2005 2006 You are a nonresident alien and are not engaged in a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 You own a single-family house in the United States that you rent out. Tax software 2005 2006 Your rental income for the year is $10,000. Tax software 2005 2006 This is your only U. Tax software 2005 2006 S. Tax software 2005 2006 source income. Tax software 2005 2006 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. Tax software 2005 2006 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. Tax software 2005 2006 You do not have to file a U. Tax software 2005 2006 S. Tax software 2005 2006 tax return (Form 1040NR) because your U. Tax software 2005 2006 S. Tax software 2005 2006 tax liability is satisfied by the withholding of tax. Tax software 2005 2006 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. Tax software 2005 2006 (See Publication 527, Residential Rental Property, for information on rental expenses. Tax software 2005 2006 ) Any resulting net income is taxed at graduated rates. Tax software 2005 2006 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. Tax software 2005 2006 For the first year you make the choice, also attach the statement discussed next. Tax software 2005 2006 Making the choice. Tax software 2005 2006   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. Tax software 2005 2006 Include the following in your statement. Tax software 2005 2006 That you are making the choice. Tax software 2005 2006 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. Tax software 2005 2006 A complete list of all your real property, or any interest in real property, located in the United States. Tax software 2005 2006 Give the legal identification of U. Tax software 2005 2006 S. Tax software 2005 2006 timber, coal, or iron ore in which you have an interest. Tax software 2005 2006 The extent of your ownership in the property. Tax software 2005 2006 The location of the property. Tax software 2005 2006 A description of any major improvements to the property. Tax software 2005 2006 The dates you owned the property. Tax software 2005 2006 Your income from the property. Tax software 2005 2006 Details of any previous choices and revocations of the real property income choice. Tax software 2005 2006   This choice stays in effect for all later tax years unless you revoke it. Tax software 2005 2006 Revoking the choice. Tax software 2005 2006   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. Tax software 2005 2006 S. Tax software 2005 2006 Individual Income Tax Return, for the year you made the choice and for later tax years. Tax software 2005 2006 You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. Tax software 2005 2006 If this time period has expired for the year of choice, you cannot revoke the choice for that year. Tax software 2005 2006 However, you may revoke the choice for later tax years only if you have IRS approval. Tax software 2005 2006 For information on how to get IRS approval, see Regulation section 1. Tax software 2005 2006 871-10(d)(2). Tax software 2005 2006 Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . Tax software 2005 2006 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. Tax software 2005 2006 Attach a statement to your return that includes the following information (if applicable). Tax software 2005 2006 Your name, taxpayer identification number, and tax year. Tax software 2005 2006 A description of the types of services performed (whether on or off board). Tax software 2005 2006 Names of vessels or registration numbers of aircraft on which you performed the services. Tax software 2005 2006 Amount of U. Tax software 2005 2006 S. Tax software 2005 2006 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. Tax software 2005 2006 Total amount of U. Tax software 2005 2006 S. Tax software 2005 2006 source transportation income derived from all types of services for the calendar year. Tax software 2005 2006 This 4% tax applies to your U. Tax software 2005 2006 S. Tax software 2005 2006 source gross transportation income. Tax software 2005 2006 This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. Tax software 2005 2006 For transportation income from personal services, the transportation must be between the United States and a U. Tax software 2005 2006 S. Tax software 2005 2006 possession. Tax software 2005 2006 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. Tax software 2005 2006 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. Tax software 2005 2006 S. Tax software 2005 2006 residence with a period of nonresidence. Tax software 2005 2006 The special rule applies if you meet all of the following conditions. Tax software 2005 2006 You were a U. Tax software 2005 2006 S. Tax software 2005 2006 resident for a period that includes at least 3 consecutive calendar years. Tax software 2005 2006 You were a U. Tax software 2005 2006 S. Tax software 2005 2006 resident for at least 183 days in each of those years. Tax software 2005 2006 You ceased to be treated as a U. Tax software 2005 2006 S. Tax software 2005 2006 resident. Tax software 2005 2006 You then again became a U. Tax software 2005 2006 S. Tax software 2005 2006 resident before the end of the third calendar year after the end of the period described in (1) above. Tax software 2005 2006 Under this special rule, you are subject to tax on your U. Tax software 2005 2006 S. Tax software 2005 2006 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. Tax software 2005 2006 Example. Tax software 2005 2006 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. Tax software 2005 2006 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. Tax software 2005 2006 During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). Tax software 2005 2006 He returned to the United States on October 5, 2013, as a lawful permanent resident. Tax software 2005 2006 He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). Tax software 2005 2006 Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. Tax software 2005 2006 Reporting requirements. Tax software 2005 2006   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. Tax software 2005 2006 The return is due by the due date (including extensions) for filing your U. Tax software 2005 2006 S. Tax software 2005 2006 income tax return for the year that you again become a U. Tax software 2005 2006 S. Tax software 2005 2006 resident. Tax software 2005 2006 If you already filed returns for that period, you must file amended returns. Tax software 2005 2006 You must attach a statement to your return that identifies the source of all of your U. Tax software 2005 2006 S. Tax software 2005 2006 and foreign gross income and the items of income subject to this special rule. Tax software 2005 2006 Expatriation Tax The expatriation tax provisions apply to U. Tax software 2005 2006 S. Tax software 2005 2006 citizens who have renounced their citizenship and long-term residents who have ended their residency. Tax software 2005 2006 The rules that apply are based on the dates of expatriation, which are described in the following sections. Tax software 2005 2006 Expatriation Before June 4, 2004. Tax software 2005 2006 Expatriation After June 3, 2004, and Before June 17, 2008. Tax software 2005 2006 Expatriation After June 16, 2008. Tax software 2005 2006 Long-term resident defined. Tax software 2005 2006   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. Tax software 2005 2006 In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. Tax software 2005 2006 Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. Tax software 2005 2006 S. Tax software 2005 2006 taxes. Tax software 2005 2006 Unless you received a ruling from the IRS that you did not expatriate to avoid U. Tax software 2005 2006 S. Tax software 2005 2006 taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. Tax software 2005 2006 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). Tax software 2005 2006 Table 4-1. Tax software 2005 2006 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . Tax software 2005 2006 . Tax software 2005 2006 . Tax software 2005 2006   THEN the rules outlined on this page apply if . Tax software 2005 2006 . Tax software 2005 2006 . Tax software 2005 2006     Your 5-year average annual net income tax was more than . Tax software 2005 2006 . Tax software 2005 2006 . Tax software 2005 2006 OR Your net worth equaled or exceeded . Tax software 2005 2006 . Tax software 2005 2006 . Tax software 2005 2006 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. Tax software 2005 2006 Reporting requirements. Tax software 2005 2006   If you lost your U. Tax software 2005 2006 S. Tax software 2005 2006 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. Tax software 2005 2006 If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. Tax software 2005 2006   Your U. Tax software 2005 2006 S. Tax software 2005 2006 residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. Tax software 2005 2006 Penalties. Tax software 2005 2006   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. Tax software 2005 2006 The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. Tax software 2005 2006 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. Tax software 2005 2006 Expatriation tax. Tax software 2005 2006   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. Tax software 2005 2006 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. Tax software 2005 2006 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. Tax software 2005 2006 Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. Tax software 2005 2006 Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. Tax software 2005 2006 $127,000 if you expatriated or terminated residency in 2005. Tax software 2005 2006 $131,000 if you expatriated or terminated residency in 2006. Tax software 2005 2006 $136,000 if you expatriated or terminated residency in 2007. Tax software 2005 2006 $139,000 if you expatriated or terminated residency in 2008. Tax software 2005 2006 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Tax software 2005 2006 You fail to certify on Form 8854 that you have complied with all U. Tax software 2005 2006 S. Tax software 2005 2006 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. Tax software 2005 2006 Exception for dual-citizens and certain minors. Tax software 2005 2006   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. Tax software 2005 2006 However, they still must provide the certification required in (3). Tax software 2005 2006 Certain dual-citizens. Tax software 2005 2006   You may qualify for the exception described above if all of the following apply. Tax software 2005 2006 You became at birth a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen and a citizen of another country and you continue to be a citizen of that other country. Tax software 2005 2006 You were never a resident alien of the United States (as defined in chapter 1). Tax software 2005 2006 You never held a U. Tax software 2005 2006 S. Tax software 2005 2006 passport. Tax software 2005 2006 You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. Tax software 2005 2006 S. Tax software 2005 2006 citizenship. Tax software 2005 2006 Certain minors. Tax software 2005 2006   You may qualify for the exception described above if you meet all of the following requirements. Tax software 2005 2006 You became a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen at birth. Tax software 2005 2006 Neither of your parents was a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen at the time of your birth. Tax software 2005 2006 You expatriated before you were 18½. Tax software 2005 2006 You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. Tax software 2005 2006 Tax consequences of presence in the United States. Tax software 2005 2006   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. Tax software 2005 2006   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. Tax software 2005 2006 Instead, you are treated as a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen or resident and taxed on your worldwide income for that tax year. Tax software 2005 2006 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. Tax software 2005 2006   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. Tax software 2005 2006 However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. Tax software 2005 2006 You have ties with other countries. Tax software 2005 2006 You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. Tax software 2005 2006 You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. Tax software 2005 2006 Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. Tax software 2005 2006 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. Tax software 2005 2006 Related employer. Tax software 2005 2006   If your employer in the United States is any of the following, then your employer is related to you. Tax software 2005 2006 You must count any days you performed services in the United States for that employer as days of presence in the United States. Tax software 2005 2006 Members of your family. Tax software 2005 2006 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Tax software 2005 2006 ), and lineal descendants (children, grandchildren, etc. Tax software 2005 2006 ). Tax software 2005 2006 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Tax software 2005 2006 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Tax software 2005 2006 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. Tax software 2005 2006 ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Tax software 2005 2006 Date of tax expatriation. Tax software 2005 2006   For purposes of U. Tax software 2005 2006 S. Tax software 2005 2006 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. Tax software 2005 2006 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. Tax software 2005 2006 You file Form 8854 in accordance with the form instructions. Tax software 2005 2006 Annual return. Tax software 2005 2006   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. Tax software 2005 2006 You must file this form even if you owe no U. Tax software 2005 2006 S. Tax software 2005 2006 tax. Tax software 2005 2006 Penalty. Tax software 2005 2006   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. Tax software 2005 2006 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. Tax software 2005 2006 How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. Tax software 2005 2006 S. Tax software 2005 2006 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Tax software 2005 2006 S. Tax software 2005 2006 trade or business. Tax software 2005 2006 For this purpose, U. Tax software 2005 2006 S. Tax software 2005 2006 source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. Tax software 2005 2006 S. Tax software 2005 2006 domestic corporation, and Debt obligations of U. Tax software 2005 2006 S. Tax software 2005 2006 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. Tax software 2005 2006 The income or gain is considered U. Tax software 2005 2006 S. Tax software 2005 2006 source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. Tax software 2005 2006 Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. Tax software 2005 2006 S. Tax software 2005 2006 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. Tax software 2005 2006 Other information. Tax software 2005 2006   For more information on the expatriation tax provisions, including exceptions to the tax and special U. Tax software 2005 2006 S. Tax software 2005 2006 source rules, see section 877 of the Internal Revenue Code. Tax software 2005 2006 Expatriation Tax Return If you expatriated or terminated your U. Tax software 2005 2006 S. Tax software 2005 2006 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. Tax software 2005 2006 Attach it to Form 1040NR if you are required to file that form. Tax software 2005 2006 If you are present in the United States following your expatriation and are subject to tax as a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen or resident, file Form 8854 with Form 1040. Tax software 2005 2006 Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. Tax software 2005 2006 Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. Tax software 2005 2006 $145,000 if you expatriated or terminated residency in 2009 or 2010. Tax software 2005 2006 $147,000 if you expatriated or terminated residency in 2011. Tax software 2005 2006 $151,000 if you expatriated or terminated residency in 2012. Tax software 2005 2006 $155,000 if you expatriated or terminated residency in 2013. Tax software 2005 2006 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Tax software 2005 2006 You fail to certify on Form 8854 that you have complied with all U. Tax software 2005 2006 S. Tax software 2005 2006 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. Tax software 2005 2006 Exception for dual-citizens and certain minors. Tax software 2005 2006   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. Tax software 2005 2006 However, they still must provide the certification required in (3) above. Tax software 2005 2006 Certain dual-citizens. Tax software 2005 2006   You may qualify for the exception described above if both of the following apply. Tax software 2005 2006 You became at birth a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. Tax software 2005 2006 You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. Tax software 2005 2006 For the purpose of determining U. Tax software 2005 2006 S. Tax software 2005 2006 residency, use the substantial presence test described in chapter 1. Tax software 2005 2006 Certain minors. Tax software 2005 2006   You may qualify for the exception described earlier if you meet both of the following requirements. Tax software 2005 2006 You expatriated before you were 18½. Tax software 2005 2006 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. Tax software 2005 2006 For the purpose of determining U. Tax software 2005 2006 S. Tax software 2005 2006 residency, use the substantial presence test described in chapter 1. Tax software 2005 2006 Expatriation date. Tax software 2005 2006   Your expatriation date is the date you relinquish U. Tax software 2005 2006 S. Tax software 2005 2006 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. Tax software 2005 2006 S. Tax software 2005 2006 resident). Tax software 2005 2006 Former U. Tax software 2005 2006 S. Tax software 2005 2006 citizen. Tax software 2005 2006   You are considered to have relinquished your U. Tax software 2005 2006 S. Tax software 2005 2006 citizenship on the earliest of the following dates. Tax software 2005 2006 The date you renounced U. Tax software 2005 2006 S. Tax software 2005 2006 citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). Tax software 2005 2006 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. Tax software 2005 2006 S. Tax software 2005 2006 nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). Tax software 2005 2006 The date the State Department issued a certificate of loss of nationality. Tax software 2005 2006 The date that a U. Tax software 2005 2006 S. Tax software 2005 2006 court canceled your certificate of naturalization. Tax software 2005 2006 Former long-term resident. Tax software 2005 2006   You are considered to have terminated your long-term residency on the earliest of the following dates. Tax software 2005 2006 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. Tax software 2005 2006 S. Tax software 2005 2006 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. Tax software 2005 2006 The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. Tax software 2005 2006 If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. Tax software 2005 2006 See Effect of Tax Treaties in chapter 1 for more information about dual residents. Tax software 2005 2006 How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). Tax software 2005 2006 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. Tax software 2005 2006 But see Exceptions , later. Tax software 2005 2006 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. Tax software 2005 2006 S. Tax software 2005 2006 internal revenue laws. Tax software 2005 2006 Losses from deemed sales must be taken into account to the extent otherwise provided under U. Tax software 2005 2006 S. Tax software 2005 2006 internal revenue laws. Tax software 2005 2006 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. Tax software 2005 2006 The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. Tax software 2005 2006 $626,000 if you expatriated or terminated residency in 2009. Tax software 2005 2006 $627,000 if you expatriated or terminated residency in 2010. Tax software 2005 2006 $636,000 if you expatriated or terminated residency in 2011. Tax software 2005 2006 $651,000 if you expatriated or terminated residency in 2012. Tax software 2005 2006 $668,000 if you expatriated or terminated residency in 2013. Tax software 2005 2006 Exceptions. Tax software 2005 2006   The mark-to-market tax does not apply to the following. Tax software 2005 2006 Eligible deferred compensation items. Tax software 2005 2006 Ineligible deferred compensation items. Tax software 2005 2006 Interests in nongrantor trusts. Tax software 2005 2006 Specified tax deferred accounts. Tax software 2005 2006 Instead, items (1) and (3) may be subject to withholding at source. Tax software 2005 2006 In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. Tax software 2005 2006 In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. Tax software 2005 2006 See paragraphs (d), (e), and (f) of section 877A for more information. Tax software 2005 2006 Expatriation Tax Return If you expatriated or terminated your U. Tax software 2005 2006 S. Tax software 2005 2006 residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. Tax software 2005 2006 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. Tax software 2005 2006 Deferral of payment of mark-to-market tax. Tax software 2005 2006   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. Tax software 2005 2006 If you make this election, the following rules apply. Tax software 2005 2006 You can make the election on a property-by-property basis. Tax software 2005 2006 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. Tax software 2005 2006 Interest is charged for the period the tax is deferred. Tax software 2005 2006 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. Tax software 2005 2006 The due date of the return required for the year of death. Tax software 2005 2006 The time that the security provided for the property fails to be adequate. Tax software 2005 2006 See item (6) below. Tax software 2005 2006 You make the election on Form 8854. Tax software 2005 2006 You must provide adequate security (such as a bond). Tax software 2005 2006 You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. Tax software 2005 2006   For more information about the deferral of payment, see the Instructions for Form 8854. Tax software 2005 2006 Prev  Up  Next   Home   More Online Publications